Ethics in Silicon Valley

Which large Silicon Valley is the most ethical in its treatment of employees? Adobe, Google, Intel, and Apple all (allegedly) participated in a scheme to avoid poaching each other's employees. The major holdout? Facebook.

In March of 2008, Arnnon Geshuri (Google Recruiting Director) discovered that non-party Facebook had been cold calling into Google’s Site Reliability Engineering (“SRE”) team. Geshuri’s first response was to suggest contacting Sheryl Sandberg (Chief Operating Officer for non-party Facebook) in an effort to “ask her to put a stop to the targeted sourcing effort directed at our SRE team” and “to consider establishing a mutual ‘Do Not Call’ agreement that specifies that we will not cold-call into each other.” ... Arnnon Geshuri also suggested “look[ing] internally and review[ing] the attrition rate for the SRE group,” stating, “[w]e may want to consider additional individual retention incentives or team incentives to keep attrition as low as possible in SRE.” Finally, an alternative suggestion was to “[s]tart an aggressive campaign to call into their company and go after their folks—no holds barred. We would be unrelenting and a force of nature.”

In August of 2008, after losing one of many employees to Facebook, Google’s Vice President of Communications emailed Google’s executive management group and Bill Campbell (Chairman of Intuit Board of Directors, Co-Lead Director of Apple, and advisor to Google). In this email, the Google Vice President expressed concern about Facebook’s “poaching” and stated that she had “offered [the employee] different roles and discussed his future at Google” but that she had “gone as far as [she could] without making promises about pay or title that would cause significant problems across [her] team.” Bill Campbell’s response was to ask, “Who should contact Sheryl [Sandberg] (or [Facebook Founder] Mark [Zuckerberg]) to get a cease fire? We have to get a truce.” Facebook refused. Facebook continued to poach Google’s employees. In 2010, for example, [redacted] of Facebook’s new employees were recruited from Google. Accordingly, in October 2010, Google began studying Facebook’s solicitation strategy. A month later (and two months after the DOJ made public its investigation of Defendants), Google announced its “Big Bang,” which involved an increase to the base salary of all of its salaried employees by 10% and provided an immediate cash bonus of $1,000 to all employees.

There is an interesting dynamic explored in the court document (from which the quote above is pulled.) Large companies try to achieve salary "equity" by defining a compensation range for employees with similar job responsibilities. This is not exactly a secret; manager training at Sun stated that raises for employees at the bottom of the range should be larger than raises for identically-rated employees higher in the range.

But what happens when an employee is offered a job at a different company at a high price point? If his or her current employer makes a counter-offer, it disturbs salary equity. This is believed to lead to morale and retention problems, if peer employees are not also adjusted upwards. Hence the motivation to avoid competing for employees, particularly with firms whose wages you benchmark to form the salary bands in the first place!

The defendants' argument why this case should not have class status seems to state that the effect is limited purely to employees who were not "poached", and did not hold down wages more generally. But the impact could actually be industry-wide.

These revelations are not new--- the DOJ investigation was 2010, and the suit originated in 2011--- but the class-action suit can now proceed due to a rejected appeal, which is producing some more news coverage.